Ford Seeks U.S.-EU Standard Recognition in Trade Treaty

Cars imported into the U.S. are charged a 2 percent duty, and those brought into Europe are charged 10 percent, Ford’s European vice president for governmental affairs Wolfgang Schneider said. Photographer: Andrew Harrer/Bloomberg

March 6 (Bloomberg) -- Ford Motor Co., the second-largest
American automaker, called for the removal of trade tariffs
between the U.S. and Europe and said the two markets’ regulators
should accept each other’s safety and environmental standards.

Duties on cars and commercial vehicles shipped between the
U.S. and European Union countries and differing vehicle-quality
and emissions rules add cost burdens and prevent development of
uniform models for global markets, Wolfgang Schneider, Ford’s
European vice president for governmental affairs, said in an
interview. The benefits of a potential treaty that’s now being
considered may “kick in” by 2020, he said.

“The value of a free-trade agreement to us lies more in
the elimination of regulatory barriers than in the elimination
of tariff barriers,” Schneider said yesterday at the Geneva
Motor Show. “Let’s eliminate the tariff barriers, but let’s
also eliminate the regulatory barriers.”

A trans-Atlantic trade deal is progressing after President
Barack Obama promised to pursue an agreement to expand the
world’s largest economic relationship in his State of the Union
address in February. EU Trade Commissioner Kerek De Gucht said
on Feb. 13 the 27-nation bloc is targeting completion of the
talks with the U.S. in two years to lower import tariffs, ease
regulatory barriers and expand access in investment, services
and public procurement.

Tariff Rates

Cars imported into the U.S. are charged a 2 percent duty,
and those brought into Europe are charged 10 percent, he said.
For commercial vehicles, the respective taxes are 22 percent on
U.S. products and 10 percent on European models, Schneider said.

The full potential of creating the world’s biggest free-trade zone would emerge from eliminating spending to design
products to fit local requirements, Schneider said. A trans-Atlantic trade deal would enable Dearborn, Michigan-based Ford
and other automakers develop more vehicles on a global basis,
which would improve margins and cut prices for consumers.

“People are pretty much the same across the Atlantic,” he
said. “The infrastructure is extremely similar, so it makes
really no sense to maintain this different environment and
safety standards.”

Global Vehicles

The U.S. carmaker has reported 14 consecutive quarters of
net income and boosted profit margins under the “One Ford”
strategy implemented by Chief Executive Officer Alan Mulally.
The program focuses on developing models to be sold worldwide,
rather than creating different vehicles for various regions.

Schneider said the U.S. and Europe would have “significant
difficulties” in specifying acceptance of each party’s rules
down to minutiae such as how crash-test dummies are used in
safety testing. Ford is calling instead for a more general
“mutual recognition” policy in the treaty that doesn’t focus
on regulatory details, he said.

“We say a U.S. vehicle is safe, the U.S. says a European
vehicle is safe,” Schneider said. “If we really start to go
through side protection, airbags, roof protection, emission
standards, this will be a long and tedious process. Past
experience shows it’s almost impossible to get an agreement
around that.”